Gold, silver sell off on bearish reaction to hawkish Fed

Gold and silver futures prices are sharply lower in midday U.S. trading Thursday. The metals are reeling after a surprisingly hawkish report from the Federal Reserve Wednesday afternoon. February gold futures were last down $36.50 at $1,788.50 and March Comex silver was last down $1.05 at $22.11 an ounce.

The Federal Reserve's FOMC minutes that were released Wednesday afternoon indicated a "very tight" U.S. job market and rising inflation might require the central bank to raise interest rates even sooner than many already expected, and begin reducing its overall asset balance sheet. The minutes suggested inflationary concerns outweigh the economic risks posed by the rampant Omicron variant of the coronavirus. The probability that the Fed will raise interest rates in March rose to greater than 70%, according to the Fed funds futures market.

Rising U.S. interest rates as evidenced by rising U.S. Treasury yields are bullish for the U.S. dollar. Gold and the greenback many times move in the opposite direction on a daily basis. However, the U.S. dollar index has shown little reaction to the Fed minutes. Gold and the U.S. dollar compete with each other as a safe-haven store of value. Keep in mind, however, that the longer-term implications of rising interest rates and problematic price inflation are historically bullish for hard assets like the precious metals.

What does bitcoin at $100k mean for gold price? Goldman weighs in

The yield on the U.S. 10-year Treasury note is presently fetching 1.732%. U.S. bond yields have been on the rise for three weeks and have taken a big jump this week, including after the hawkish FOMC minutes. For perspective, the German 10-year bond (bund) is presently yielding -0.096% and the U.K. 10-year bond (gilt) yield is trading at 1.148%.

Global stock markets were lower overnight. U.S. stock indexes are mixed at midday.

The key "outside markets" today see Nymex crude oil futures prices higher, at a seven-week high and trading around $79.75 a barrel. The U.S. dollar index is slightly up today.

Attention turns to Friday's U.S. employment situation report for December, which is expected to see its key non-farm payrolls component show a rise of 425,000 after a rise of 210,000 in the November report. The overall unemployment rate is seen at 4.1% in December compared to 4.2% reported in the November report.

Technically, the February gold futures bulls have lost their overall near-term technical advantage as a three-week-old price uptrend on the daily chart has been negated. Bulls' next upside price objective is to produce a close in February futures above solid resistance at this week's high of $1,833.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the December low of $1,753.00. First resistance is seen at $1,800.00 and then at the overnight high of $1,811.60. First support is seen at today's low of $1,785.40 and then at $1,775.00. Wyckoff's Market Rating: 5.0

March silver futures bears have the firm overall near-term technical advantage and have regained power late this week. Silver bulls' next upside price objective is closing prices above solid technical resistance at the December high of $23.48 an ounce. The next downside price objective for the bears is closing prices below solid support at the December low of $21.41. First resistance is seen at $22.50 and then at the overnight high of $22.85. Next support is seen at $21.75 and then at $21.41. Wyckoff's Market Rating: 2.0.

By Jim Wyckoff

For Kitco News

Time to buy Gold and Silver on the dips

 

David

Gold price loses gains as Fed minutes signal faster rate hikes, balance sheet reduction

he price of gold edged down after the release of the December Federal Reserve meeting minutes signaled a possibility of earlier and faster rate hikes.

Federal Reserve officials noted that a tight labor market and high inflation in the U.S. might require faster rate hikes and a reduction in the central banks’ overall asset holdings, according to the meeting minutes released on Wednesday.

“Participants generally noted that, given their individual outlooks for the economy, the labor market, and inflation, it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated,” the minutes stated.

The minutes revealed a more hawkish tone, with the Fed officials considering a decline in their U.S. Treasury bonds and mortgage-backed securities holdings.

“Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve’s balance sheet relatively soon after beginning to raise the federal funds rate,” the minutes said.

Markets are still waiting for the Fed to comment on the impact of the omicron variant. This could come as soon as next week as Powell is scheduled to testify before the Senate Banking Committee for his nomination hearing.

In response to the news, gold erased most of its daily gains. February Comex gold futures were last at $1,816.50, up 0.10% on the day. Earlier in the session, February gold was trading at a daily high of $1,830 an ounce.

Gold price tanked last year, can Fed make metal even worse in 2022?The December meeting marked a hawkish turning point for the Fed. The central bank announced that it would be doubling its tapering pace to $30 billion a month, which would conclude the Fed's asset-purchasing program in early 2022.

The Fed cited problematic inflation and a strong economic recovery as the main reasons for the shift in policy.

It is "really appropriate" to make this monetary policy shift due to the current state of the U.S. economy, inflation, and wages, Fed Chair Jerome Powell told reporters in December. "Price increases have now spread to a broader range of goods and services."

The updated dot-plot also revealed that Fed officials were projecting three quarter-point rate hikes in 2022.

Powell ended his December press conference by pointing out that the Fed won't be raising rates until the taper is complete. "Buying assets is adding accommodation, raising rates is removing accommodation. Since we're two meetings away from completing the taper, assuming things go as expected, if we want it to lift off before then, we would stop the taper potentially sooner. But it's not something I expect to happen," Powell said.

According to the updated projections, the Fed is looking at the real GDP to grow 5.5% in 2021 and 4% in 2022. The central bank's PCE inflation forecast was upgraded to 2.6% from 2.2% in 2022.

 

By Anna Golubova

For Kitco News

Time to buy Gold and Silver on the dips

David

Gold finds support at $1798 and moves higher as Omicron variant surges

A tremendous spike of Covid-19 infections in the United States has broken previous records with 1 million new infections on Monday, according to the John's Hopkins University of Medicine. According to the CDC, the new variant "omicron" represents 95% of all new cases in the U.S.

According to Reuters, "The United States set a global record of almost 1 million new coronavirus infections reported on Monday, according to a Reuters tally, nearly double the country's peak of 505,109 hit just a week ago as the highly contagious Omicron variant shows no sign of slowing. The number of hospitalized COVID-19 patients has risen nearly 50% in the last week and now exceeds 100,000, a Reuters analysis showed, the first time that threshold has been reached since the winter surge a year ago."

According to the World Health Organization, the good news is "evidence thus far suggests Omicron is causing less severe illness. Nevertheless, public health officials have warned that the sheer volume of Omicron cases threatens to overwhelm hospitals, some of which are already struggling to handle a wave of COVID-19 patients, primarily among the unvaccinated."

The surge in new infections coupled with a weaker than expected U.S. manufacturing report was the primary component that took gold higher today. The ISM manufacturing index was forecasted to come in at 60.0%. However, the actual number came in below that at 58.7%. The ISM report clearly showed that growth amongst U.S. manufacturers is slowing faster than expected. The concern is that inflationary pressures will continue to grow and stifle economic recovery.

As of 4:23 PM EST gold futures basis, the most active February contract is fixed at $1814.90 after factoring in today's gain of 0.82%, or $14.80. Silver also had strong advances today with the most active March 2022 contract currently up $0.28 and fixed at $23.09.

On Friday, the U.S. Labor Department will release the jobs report for December 2021. This will certainly be the most important report that comes out this week. Current forecasts from economists polled by various new sources are indicating that the unemployment rate will decline to 4.1% and that the United States will have filled an additional 410,000 jobs. This is after a tepid jobs report last month which showed that only 210,000 new jobs were added in November.

The forecasted numbers for Friday's jobs report are currently being baked into the current pricing of the financial markets, including the precious metals. If the actual numbers come in well under the forecasted predictions, we could see a continuation of solid bullish market sentiment for gold and silver. However, if they come in at or above the forecasted projections, it could certainly diminish the bullish market sentiment that currently exists in both metals.

 

By Gary Wagner

Contributing to kitco.com

Time to buy Gold and Silver on the dips

David

The first trading day of 2022 results in strong declines in both gold and silver

The first trading day contained strong bullish market sentiment for U.S. equities and dollar strength. The dollar gained 0.632 points or a percentage gain of 0.66%. Concurrently U.S. equities all traded to higher ground, with all three major indices closing near their record highs. The Dow Jones industrial average gained 246.76 points, a percentage gain of 0.68%. The NASDAQ composite gained 1.2% or 187.83 points, and the Standard & Poor’s 500 gained 30.38 points taking the index to a record high close at 4796.49.

The combination of a strong performance in U.S. equities, U.S. dollar strength and rising interest rates vis-à-vis U.S. debt instruments pressured the precious metals lower across the board. Palladium had the largest percentage drawdown giving up 4.45% or $85.10, with the most active futures contract currently fixed at $1827. This puts the differential between gold and palladium approximately $26 apart. Silver lost 1.85% in trading today or $0.43 taking the most active March Comex futures contract to $22.92. Platinum also sustained a loss just over a full percentage point with the most active Comex contract currently fixed at $954.90 a decline of 1.17%.

With 2021 behind us, we can see that gold had a fairly strong decline in 2021 of 3.6%. It seems as though the recent rise in treasury yields has not affected U.S. equities with any negative market sentiment. Of course, the U.S. dollar rose as a direct result of higher yields in treasuries. This Friday when the U.S. Labor Department releases its nonfarm payroll report will be the next large catalyst that will move gold in one direction or the other. Currently, economists polled are forecasting a gain of 400,000 jobs and considering that the December report for November’s jobs came in roughly half of the projection. If the economist projections are correct, it will represent a tremendous rise in new jobs added last month.

As of 5:05 PM EST gold futures basis, the most active February 2022 Comex contract has sustained a decline of $27.30, or 1.49%. Gold futures are currently fixed at $1801.30. Gold opened in tradingthis morning at $1830, traded to an intraday high of $1833 before falling just below $1800 at $1798.20. Unquestionably gold has traded under dramatic pressure today but, at least for now, was able to close above the key psychological level of $1800 per ounce.

Our technical studies indicate major resistance at $1833.50, which corresponds to the 38% Fibonacci retracement from a short data set beginning at $1758.20. The lows occurred on November 3, which was the day the November FOMC meeting ended. Our Fibonacci data set includes November 16, when market forces took gold to an intraday high of $1879.80. Below that major resistance area is the next level which occurs at $1816, which is a price point that gold traded to before finding resistance on multiple occasions. And the last level of resistance comes in between $1800 and $1804.60 which is the 61.8% Fibonacci retracement level using the same data set as above.

Although gold sold off harshly today if it can hold the price point above $1800, it bodes well for that price point being a key and critical support level. Our studies also indicate a major level of support at $1785 which is based upon the 78% Fibonacci retracement level.

 

By Gary Wagner

Contributing to kitco.com

Time to buy Gold and Silver on the dips

 

David

What does 2022 hold for Gold, Silver and Platinum?

Today ends 2021; the year in metals was not pretty. Gold, silver and platinum all closed lower from where they opened the year. None of them could seem to get a consistent trend. Silver had one of its tightest trading ranges in years. 

As we look ahead to the new year, we would expect much of the same action. However, they appear to be setting up for a much bigger move – direction to be decided. A case can be made for either side and probably will make big moves in both directions. 

We could see as low as $1,450 in Gold and see new highs; platinum could bring $800 and new highs, silver under $20 and $35. The compression we have watched suggests we could see either of these moves or all of them. We can confidently say that 2022 will bring a ton of volatility and big moves in both directions. 

In all markets, price action determines what will happen in the next day, week, or month. Keep the two strategies separate. The worst trade anyone can make is turning a trade into an investment hoping for a way out. Traders must learn to take their losses and move on to the next trade. 

Patience, discipline, and money management always win the day. Let the map of the markets show you the way.

On Monday, Jan. 23, 2022, we will resume the Monday Night Strategy Call at 4:30 EST. 

2022-01-03 Monday Night Strategy Call

By Todd 'Bubba' Horwitz

Contributing to kitco.com

Buy Gold and Silver on Dips and earn monthly yields on holdings

David

Gold Investors need to look beyond rate hikes in 2022 – State Street Global Advisors

After a disappointing year, gold prices are ringing in 2022 on a solid note, trading at a five-week high. According to one precious metals analyst, gold should be on pace to resume its long-term bullish uptrend in the new year.

In a telephone interview with Kitco News, George Milling-Stanley, chief gold strategist at State Street Global Advisors, said that his base case scenario, with a 50% probability, is for gold prices to trade between $1,800 and $2,000 an ounce in 2022. He added that he sees a 30% chance of gold prices pushing above $2,000 to a new record high.

“We see an 80% chance of gold prices staying in the current range to moving higher next year,” he said. “Even with the Federal Reserve looking to tighten interest rates next year, we think gold has a pretty good chance of moving higher.”

On the downside, Milling-Stanley said that State Street sees a 20% chance of gold trading between $1,600 and $1,800 an ounce.

Milling-Stanley reiterated his stance that gold investors don’t have to fear the impending pivot in the Federal Reserve’s monetary policy. During the last U.S. central bank monetary policy meeting, the Federal Reserve signaled that it would end its monthly bond purchases by March and raise interest rates three times next year.

However, Milling-Stanley pointed out that during the last tightening cycle, between 2015 and 2019, the Federal Reserve raised interest rates nine times and gold prices rallied nearly 35%. He added this isn’t an isolated incident. Between 2004 and 2005 the U.S. central bank raised rates 17 times and gold prices rallied 70%, he said.

“Investors should look beyond nominal policy rates and examine other factors such as real interest rates and/or the gold market’s supply and demand dynamics that may impact gold price movement,” Milling-Stanley said in his 2022 outlook forecast.

Milling-Stanley added that investors also need to put the Federal Reserve’s monetary policy stance in a much larger perspective within financial markets. With inflation expected to remain elevated through 2022, real interest rates will remain in negative territory.

Milling-Stanley said that it is unlikely Federal Reserve Chair Jerome Powell will take an overly aggressive stance on monetary policy to combat inflation. He added that he forecasts that the Federal Reserve will only raises interest rates twice next year, an estimate below current market predictions.

“Raising interest rates tend to chock off economic growth and important sectors like the housing market,” he said. “That is the last thing the Federal Reserve will want to do next year. I think the Federal Reserve would tolerate inflation between 3% and 6.”

Looking past interest rates and U.S. monetary policy, Milling-Stanley said that gold will also remain an attractive safe-haven asset in 2022 as investors look to hedge their risky bets.

One reason investors shunned gold through 2021 is due to the unprecedented bullish fun in equity markets. The S&P 500 is looking to the year at record highs, up 27% for the year.

Although real interest rates are expected to remain low, Milling-Stanley said that inflation could weigh on elevated equity market valuations.

“Given the strong rally in financial markets in 2021, the potential for a cyclical correction, valuation-driven mean reversion, increased market volatility, or an exogenous tail risk has increased in 2022,” Milling-Stanley said in his outlook forecast. “This potential for higher volatility may push investors to gold as a potential hedge against heightened market risks. Historically, gold has served investors well against short-term volatility shocks.”

Milling-Stanley said that one final factor that should help support gold in the new year is a potential recovery in emerging markets.

“In China and India — two of the key emerging economies for the gold market — signs point to further consumer recovery throughout 2022,” he said.
 

By Neils Christensen

For Kitco News

 

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David

Gold, silver slightly up as near-term chart postures improving

Gold and silver prices are a bit higher near midday Tuesday, with gold notching a five-week high and silver a four-week high in the early going. The two precious metals markets are seeing the bullish traders working on near-term price uptrends for both. Sharp gains in crude oil futures recently are also supporting the precious metals markets. February gold was last up $3.60 at $1,812.40 and March Comex silver was last up $0.151 at $23.14 an ounce.

Global stock markets were mostly higher overnight. U.S. stock indexes are mixed near midday and are at or near their record highs. Traders and investors continue to exhibit general “risk-on” attitudes that are bullish for the stock markets, and that is limiting the upside in the safe-haven metals. The Omicron strain of the coronavirus is proving to produce less serious illness than the other strains, while new vaccines and therapeutics are rolling out to battle the virus. “Serious but manageable” appears to be how the marketplace is viewing the matter. The U.S. Center for Disease Control has just cut in half the quarantine time for those exposed to the virus.

The key “outside markets” today see Nymex crude oil prices higher, hitting a five-week high early on, and now trading around $75.85 a barrel. The U.S. dollar index is slightly up. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.472%.

Technically, February gold futures bulls have the overall near-term technical advantage and are working on a near-term price uptrend. Bulls’ next upside price objective is to produce a close above solid resistance at $1,840.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,775.00. First resistance is seen at today’s high of $1,821.60 and then at $1,825.00. First support is seen at $1,800.00 and then at last week’s low of $1,785.00. Wyckoff's Market Rating: 6.5.

March silver futures bears still have the overall near-term technical advantage. However, recent price action suggests a market bottom is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the December low of $21.41. First resistance is seen at today’s high of $23.48 and then at $23.75. Next support is seen at this week’s low of $22.655 and then at $22.44. Wyckoff's Market Rating: 3.5.

March N.Y. copper closed down 310 points at 444.10 cents today. Prices closed nearer the session low and hit a four-week high early on today. The copper bulls have the overall near-term technical advantage as they are working on a near-term price uptrend. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the October high of 477.70 cents. The next downside price objective for the bears is closing prices below solid technical support at 425.00 cents. First resistance is seen at the November high of 451.15 cents and then at 455.00 cents. First support is seen at 440.00 cents and then at this week’s low of 434.50 cents. Wyckoff's Market Rating: 6.0.

By Jim Wyckoff

For Kitco News

Buy, Sell Gold and Silver, with Free Storage and Monthly Yields

 

David

Gold trades both sides of unchanged in quieter session

Gold prices are near steady in subdued midday U.S. trading Monday. Gains are being squelched by less risk aversion in the marketplace recently, while sellers of the precious metals are tepid amid rising inflation worries. February gold was last down $1.00 at $1,810.60 and March Comex silver was last up $0.115 at $23.035 an ounce.

Global stock markets were mostly weaker overnight in quieter, post-holiday trading. Some markets overseas remained closed for the Christmas holiday. U.S. stock indexes are higher and at or near record highs at midday.

There are still coronavirus worries, but there are also vaccines and drugs coming on line to battle the virus. One market analyst termed the marketplace’s present attitude regarding the coronavirus battle, “serious but manageable.”

Simmering on the back burner of the marketplace is a potential geopolitical crisis, as Russia’s troop buildup on the Ukrainian border has alarmed the U.S. and Europe.

The key “outside markets” today see Nymex crude oil prices solidly higher and trading around $75.75 a barrel. The U.S. dollar index is slightly up today. Meantime, the yield on the U.S. Treasury 10-year note is presently fetching 1.482%.

Technically, February gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $1,840.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,775.00. First resistance is seen at the December high of $1,815.70 and then at $1,825.00. First support is seen at $1,800.00 and then at last week’s low of $1,785.00. Wyckoff's Market Rating: 6.0.

March silver prices hit a three-week high today. The silver bears still have the overall near-term technical advantage. However, recent price action suggests a market bottom is in place. Silver bulls' next upside price objective is closing prices above solid technical resistance at $24.00 an ounce. The next downside price objective for the bears is closing prices below solid support at the December low of $21.41. First resistance is seen at today’s high of $23.15 and then at $23.50. Next support is seen at today’s low of $22.655 and then at $22.44. Wyckoff's Market Rating: 3.0.

March N.Y. copper closed up 965 points at 448.95 cents today. Prices closed near the session high and hit a four-week high today. The copper bulls have regained the overall near-term technical advantage. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the October high of 477.70 cents. The next downside price objective for the bears is closing prices below solid technical support at 425.00 cents. First resistance is seen at the November high of 451.15 cents and then at 455.00 cents. First support is seen at 445.00 cents and then at 440.00 cents. Wyckoff's Market Rating: 6.0.

By Jim Wyckoff

For Kitco News

Buy Gold and Silver on Dips and earn monthly yields on holdings

David

Seasonally gold price looks strong, but analysts ask if it can hold above $1,800 through the new year?

Welcome to Kitco News' 2022 outlook series. The new year will be filled with uncertainty as the Federal Reserve looks to pivot and tighten its monetary policies. At the same time, the inflation threat continues to grow, which means real rates will remain in low to negative territory. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2022.

Sentiment remains bullish on gold as prices head into the Christmas holidays above $1,800 an ounce; however, the advice from markets analysts is: if you don't have to trade next week, don't.

Most Wall Street analysts note that gold is starting a strong season period; however, the next two weeks will see high volatility on extremely low trading volume. Many firms have already closed their books for the year ahead of the holidays.

The low-volume environment was also reflected in the participation rate of this week's gold survey.

This week 13 Wall Street analysts participated in Kitco News' gold survey. Among the participants, nine analysts, or 69%, called for gold prices to rise next week. At the same time, bearish and neutral views garnered two votes or 15% each.

Meanwhile, a total of 638 votes were cast in online Main Street polls. Of these, 343 respondents, or 54%, looked for gold to rise next week. Another 134, or 21%, said lower, while 161 voters, or 25%, were neutral.

Pic

The continued bullish sentiment comes as gold prices look to end the shortened trading week above $1,800 an ounce, relatively unchanged from last week.
 

Most analysts are bullish on gold in the near term as December and the early months of the new year are seasonally solid periods for the precious metal.

"Nine out of the last ten years, you would have made money buying gold on the last trading day before Christmas and selling by Jan. 11," said Phillip Streible, chief market strategist at Blue Line Futures. "There is always a lot of uncertainty at the start of the year, so investors probably feel comfortable holding a little bit of gold as a safe-haven hedge."

Along with bullish seasonal factors, analysts are also optimistic on gold as its technical outlook continues to improve, with prices holding above $1,800 an ounce. However, for some analysts, gold needs to break above initial resistance at $1,815 and long-term resistance at $1,835.

Can gold price rally 15% in 2022? Here are the triggers to watch

However, not all analysts are optimistic about gold in the near term.

David Madden, market analyst at Equiti Capital, said that while gold has room to move slightly higher next week, it is difficult to be bullish as the U.S. dollar remains strong.

"The U.S. dollar hasn't broken above its November highs, but it is still in a strong uptrend, and that will weigh on gold," he said. "I wouldn't want to short the U.S. dollar when the Federal Reserve is looking to raise interest rates three times next year."

Christopher Vecchio, senior market strategist at DailyFX, said that he is neutral on gold in the near term but said that he is not optimistic about the precious metal.

"Gold lacks fundamental news to drive prices sustainable higher," he said. "With the Federal Reserve looking to raise interest rates next year, real yields should rise and that will be negative for gold."

By Neils Christensen

For Kitco News

Buy Gold and Silver on Dips and earn monthly yields on holdings

David

The bullish season for gold price begins, can gold tackle $1,850?

Gold price is looking to get a boost from a seasonably favorable time that began in mid-December. And analysts are eyeing whether the momentum will be strong enough to take gold above $1,850 an ounce — the next hurdle in the price trend.

"From a seasonal perspective, demand for physical gold is a big aid in driving prices higher from mid-December to Valentine's Day. In the next 6-8 weeks, gold and silver could thrive," Walsh Trading co-director Sean Lusk told Kitco News. "With the new variant coming in, easy money policies will remain. Granted, the Fed signaled that they would start rate hikes. But there is still a lot of uncertainty out there — global economic recovery and new geopolitical tensions."

This is why gold held the $1,780-$1,800 range, Lusk noted. At the time of writing, February Comex gold futures were ending the week at $1,809.50.

The Federal Reserve's more aggressive tapering and the potential of three rate hikes in 2022 have already been largely priced in. This means that any new fear could change the outlook and benefit gold.

"The trend is turning higher into next year. It seems like the new COVID-19 variant could give the Fed more pause on the aggressive taper and rate hikes. Geopolitical risks or a crude oil disruption could impact markets' perceptions," Lusk added.

Before committing one way or the other, investors need to make sure the current move higher in gold is not a head fake, warned RJO Futures senior market strategist Frank Cholly.

"The gold market keeps making these head fakes. It breaks out and rallies, but then the move fades quickly. I can't get too excited about gold until we hit $1,835 or maybe even above $1,850," Cholly told Kitco News.

From a technical perspective, funds don't have a strong long position in gold going into next year. And that might be changing, Lusk pointed out. Gold could challenge the $1,880 an ounce level last seen in mid-November.

"Head and shoulders could be forming, and we might start to shoot higher. We are getting higher lows. That ultimately brings about higher highs. In the near term, a spike up to $1,815 on the February contract could be hit. If we blow through that, it is clear sailing up to $1,833, and then $1,875," Lusk described.

If gold manages to close the year at $1,850, the next target would be up at around $2,000 an ounce, he added.

Tide will turn for gold price in 2022 as real yields remain low despite Fed rate hikes

Problematic inflation is one of the macro drivers that will finally kick in and help drive prices higher in 2022, said Cholly.

"There is going to be a point that gold begins to get a lift from the idea that this inflation is heating up. As we move into Q1 2022, we will see further price pressures. And when gold gets above $1,850 this time around, the path of least resistance will be higher," he noted.

Once gold is comfortably above $1,850, more people will jump in on the fear of missing out, Cholly added.

Even though the initial reaction to the Fed tapering and higher interest rates might be negative for gold, once processed, it could trigger another rally, according to Cholly.

"Often, higher rates will mean a stronger dollar. But the Fed's tightening cycle in 2022 could be bullish for gold. It may not be the initial reaction, but as inflation hits all other commodities, gold will be in demand," he said. "When prices go up, most commodities see a curb in demand. For gold, this creates demand — the fear of missing out. The inflation hedge narrative is something people are going to want."

Data during the last week of the year

It will be a fairly quiet data week because of the holidays. Some releases to keep a close eye on next week include Tuesday's CB consumer confidence, Wednesday's pending home sales, and Thursday's jobless claims.

 

By Anna Golubova

For Kitco News

 

Buy Gold and Silver on Dips and earn monthly yields on holdings

David